Buffett’s Search for Sure Thing Propels 76-Year Junk Food Quest – Bloomberg 08-26-14

Salient to Investors:

  • Warren Buffett says no business has ever failed with happy customers and said in 2012 that more people will be drinking Coca-Cola 10 years from now, or chewing Wrigley’s gum. Suzie Buffett said her father’s food investments mirror his tastes.
  • Tony Scherrer at Smead Capital Mgmt said Warren Buffett can look into the future with fast-food chains and candy and soda companies and not have to wonder if they’re going to be doing great things – generations to come will be eating Mars candy bars.
  • Dean Ornish at the University of California San Francisco said Coca-Cola and the red meat in Burger King’s Whopper are among the biggest contributors to obesity-related illnesses. Ornish said red meat increases the risk of premature death from heart disease as well as cancer. Harvard School of Public Health said regular consumption of sugary drinks increases the risk of developing type-2 diabetes by 26 percent.
  • Richard Cook at Cook & Bynum Capital Mgmt owns Berkshire Hathaway and Coca-Cola but said hunger for healthier food may hurt Buffett’s fast-food bets. Cook sees a real risk that the societal belief that sugar is a poison will affect consumer habits – at the margin, it lowers valuations for these companies and the growth of Coca-Cola over the next 20 years.
  • John Gordon at Pacific Mgmt Consulting said restaurant chains like Chipotle and Panera Bread have put pressure on fast-food providers.

Read the full article at http://www.bloomberg.com/news/2014-08-27/buffett-search-for-sure-thing-propels-76-year-junk-food-quest.html

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Casual Restaurant Stocks Rally Even With Weak U.S. Demand – Bloomberg 06-20-12

Salient to Investors:

Shares of casual-dining chains are rallying despite Americans eating out less because investors prefer holding stocks with little foreign exposure.

Rachael Rothman at Susquehanna Financial Group said investors are fearful of holding companies that have a lot of business outside the U.S.

Martin Leclerc at Barrack Yard Advisors is bearish, and expects casual-dining restaurants stocks to underperform because discretionary spending remains lackluster, consumers are fickle, and some stocks are at expensive valuations. Leclerc said the premiums paid in recent acquisitions is helping the stocks trade higher than they typically would relative to the S&P 500.

Malcolm Knapp said dining out is easily postponed, an indicator of what’s happening in the economy.

Jim Stellakis at Technical Alpha said the recent outperformance of the casual-dining index is losing momentum.

Read the full article at http://www.bloomberg.com/news/2012-06-20/casual-restaurant-stocks-rally-even-with-weak-u-s-demand.html